2. Financial Accounting, IFRS Edition
Chapter 10
Liabilities
Financial Accounting, IFRS Edition
Weygandt Kimmel Kieso

3. Payroll-Related Liabilities
Appendix 10D
Payroll and Payroll Taxes Payable
The term “payroll” pertains to both:
Salaries - managerial, administrative, and sales personnel (monthly or yearly rate).
Wages - store clerks, factory employees, and manual laborers (rate per hour).
Determining the payroll involves computing three amounts: (1) gross earnings, (2) payroll deductions, and (3) net pay.
SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

4. Payroll-Related Liabilities
Illustration: Assume a corporation records its payroll for the week of March 7 as follows:
Mar. 7
Salaries and wages expense 100,000
FICA tax payable 7,650
Federal income tax payable 21,864
State income tax payable 2,922
Salaries and wages payable 67,564
Record the payment of this payroll on March 11.
Mar. 11
Salaries and wages payable 67,564
Cash 67,564
SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

5. Payroll-Related Liabilities
Payroll tax expense results from three taxes that governmental agencies levy on employers.
These taxes are:
FICA tax
Federal unemployment tax
State unemployment tax
SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

6. Payroll-Related Liabilities
Illustration: Based on the corporation’s $100,000 payroll, the company would record the employer’s expense and liability for these payroll taxes as follows.
Payroll tax expense 13,850
FICA tax payable 7,650
Federal unemployment tax payable 800
State unemployment tax payable 5,400
SO 12 Prepare entries for payroll and payroll taxes under U.S. law.

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